Radian Guaranty, the mortgage insurance business of Radian Group, announced that it will no longer insure "stated income" and "stated asset" loans. This is due to the poor performance of these loans, Radian said. This change will take effect on April 30, 2008 for all new mortgage insurance applications.
The company has also announced previous revisions to its underwriting guidelines and pricing policies that will go into effect on March 31, 2008. These include adjustments to loan-to-value, documentation and FICO requirements.
Radian has also begun to acknowledge declining markets territories on its website. At the same time Moody's Investors Service affirmed the 'Aa3' insurance financial strength ratings of Radian Asset, the financial guaranty operations of Radian Group, to reflect its risk adjusted capitalization. The outlook has been changed to negative from stable due to the risk of deterioration in its business prospects and uncertainty over its future strategic direction. Radian Group's 'A2' senior debt rating and Radian Guaranty's 'Aa3' insurance financial strength ratings, along with the group's other mortgage insurance subsidiaries, remain under review for possible downgrade.
